Financial payments flow between firms and government, Macroeconomics

Explain whether, the following statements are TRUE, FALSE or UNCERTAIN. Briefly justify your answer.

(i) The circular flow shows how real resources and financial payments flow between firms and government.

(ii) A leakage is money that flows to firms without being cycled through households.

(iii) A closed economy is an economy with excessive government expenditure

(iv) The larger the marginal propensity to consume, the larger is the multiplier.

(v) A change in the amount households wish to save of each levels of income leads to a change in equilibrium income, but no change in equilibrium saving, which must equal planned investment.

(vi) An increase in government expenditure accompanied by an equal increase in net taxes will have no effect on output.

(vii) Shocks to aggregate demand immediately be offset by fiscal policy.

(viii) The effect of foreign trade is to reduce the size of the multiplier

(ix) The precautionary motive for holding money reflects a need for liquid assets.

(x) When you tried everywhere else to get money for your holidays, you go to the lender of last resorts

(xi) Movements along the IS schedule tell us about shifts in equilibrium income caused by shifts in the aggregate demand schedule as a result only of changes in interest rates.

(xii) There are no costs to inflation so long as it can be fully anticipated.

(xiii) Unemployment is always a bad thing.

(xiv) The law of comparative advantage ensures that there are gains from trade which make everyone better off.

Posted Date: 11/26/2013 6:11:23 AM | Location : United States







Related Discussions:- Financial payments flow between firms and government, Assignment Help, Ask Question on Financial payments flow between firms and government, Get Answer, Expert's Help, Financial payments flow between firms and government Discussions

Write discussion on Financial payments flow between firms and government
Your posts are moderated
Related Questions
An example of direct foreign investment is given by: a. The sale of U.S. government bonds to foreigners. b. The sale of U.S. stocks (equities) to foreigners. c. A multinational cor

#questionAssume that an economy''s GDP Y=5000. Also assume that the government runs a deficit where tax revenue T=1000 and government expendituresG= 1500. The consumption function

Consider the following demand schedule. Does it apply to a perfectly competitive firm? Compute marginal and average revenue Price Quantity Price Quantity $95 2 $55 5 $88 3 $40 6 $

Suppose the demand for loanable funds was stable but the supply fluctuated from year to year. what cause fluctuate in supply?

What are long run and short run? Long run: It is the time period wherein all inputs cannot be fixed. Short run: It is the time period within which at least one in

A company can lease an asset for the next five years by making lease payments that are equivalent to annual payments of $3,000 at year 0, $6,000 at year 1, $7,000 at year 2, $7,000

What are three modifications to a polymer that can make it transparent? How will these modifications affect the mechanical properties of the polymer?


Informal groups exist in almost every kind of organization. Answer the following questions and provide examples to support your position: • What types of informal groups do you

Potatoes cost Janice $0.50 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. Suppose she feels that the first pound of potatoes is worth $1.50,